He embodies the Middle American archetype of the plain-speaking, straight-shooting
businessman. In the age of imperious chief executives, he is cheered by
investors at annual gatherings that include barbecue and baseball.

After years of corporate scandals, Warren Buffett, 74, stands as a paragon of management. But an accelerating
investigation into certain insurance practices has ensnared one of Buffett's
main businesses, raising the possibility that the most gleaming reputation in
corporate America may be tarnished.

Insurance is at the core of Buffett's company, Berkshire Hathaway.

The U.S. Securities and Exchange
Commission and the New York State attorney general have been investigating a
deal between a Berkshire unit, General Re, and American International Group, the
world's top insurer, that may have artificially bolstered AIG's finances.

That inquiry led to the departure on
Monday of the man who built and ruled AIG for nearly four decades, Maurice
Greenberg. Investigators are also looking into other so-called finite insurance
deals by Buffett's companies.

"Some of his transactions may come back to haunt him," said Andrew Barile, an
insurance consultant. "He did a lot of the kinds of deals they're looking at."

At Berkshire Hathaway's headquarters in Omaha, Nebraska, a spokeswoman, Debbie
Bosanek, said that Buffett would not comment.

In defense of Buffett, insurance experts
say, his management of Berkshire is very different from Greenberg's time at AIG.
While Greenberg had his hands on practically every aspect of AIG, Buffett, known
more for his investing acumen than his management prowess, prefers to delegate.

"If there is damage, it might be limited
to the insurance units, without having a major impact on the Berkshire dynasty,"
said Ric Marshall, chief analyst at the Corporate Library in Portland, Maine.
"This won't have a personal impact on Buffett in the way it did with Hank
Greenberg. It's a matter of personal style and involvement."

Buffett has not been named in any of the insurance investigations.

Still, Berkshire's General Re is also under investigation by the U.S. Justice Department for its role in providing
policies to a failed liability insurance company that operated in Virginia,
Tennessee and some other states. And it has been named as a defendant in
lawsuits by two insurance regulators.

Last May, the Australian unit of General
Re agreed to pay a $27.2 million settlement with the Australian Securities and
Investments Commission over coverage to two Australian insurers that eventually
collapsed. The transaction took place before Berkshire bought General Re in
mid-1998. But Berkshire must still deal with Australian officials on the
consequences of the deals.

In his annual report to investors this
month, Buffett said the liquidator of the two Australian companies planned to
file claims against Berkshire, maintaining that General Re contributed to the
downfall of the companies by helping them with improper accounting.

On Tuesday, Berkshire disclosed that it
had received a notice to show cause from the Australian Prudential Regulatory
Authority. Berkshire said General Re had until March 29 to show why it should
not be investigated.

Berkshire says it is cooperating with all
of the investigations.

There are other differences between
Buffett and Greenberg. Like many chief executives, Greenberg was keenly aware of
his company's quarterly performance. Buffett, on the other hand, has always
managed for the long run and discouraged trading of Berkshire shares.

One of his methods to accomplish this was
to refuse to split the stock into shares of manageable trading size.

Berkshire Hathaway's stock was trading
late Wednesday at $87,800.10, down $2,099.90, or 2.3 percent.

Because Berkshire was not trying to show
consistent quarterly gains, the insurance experts said, it is doubtful that
Berkshire would have done the kinds of deals that Greenberg is said to have
arranged to strengthen his balance sheet.

Nonetheless, Buffett is enthusiastic
about insurance, and he has overseen some of the major deals done by Berkshire
units. And, along with other major reinsurers, General Re and other Berkshire
units have widely offered the kind of insurance that has been the focus of
investigators: financial reinsurance, or finite insurance, as it is often
called.

"It is possible that Gen Re, through the
sale of some of these finite insurance products, could have some financial
liability," said Kevin Lampo, an analyst with Edward Jones.

Finite insurance allows companies, often
insurers, to spread their risk of loss on an asset or business over time and to
distribute risk among other insurers willing to take it on in exchange for
premiums. It becomes questionable when it appears not to be insurance - when no
risk has been transferred - but essentially a loan.

Much finite insurance does involve a
transfer of real risk. Even so, one insurance executive said, it is probable
that the investigators "will find a lot of transactions they don't like very
well," because the risk factor may have been minimal or nonexistent.

Ira Zuckerman, an analyst with Stanford Financial Group in Boca Raton, Florida,
said it seemed highly unlikely that Buffett's reputation would suffer any major
damage as a result of the insurance investigations.

"If in fact he was involved in any of this, and if the deals were wrong,
then he has some responsibility," Zuckerman said. But even then, he said,
"I would think it's a smudge, but it's not a smear."